by Jim Hodgson

Forty years ago, I spent five weeks of July and August in the Dominican Republic, learning from families, churches and unions about the ways people confronted their impoverishment. The people that I met taught me about long-haul, multi-generational struggle and solidarity.

Soon after that visit, protests in the D.R., Egypt and Peru erupted against conditions imposed by the International Monetary Fund (IMF) and foreign banks. The issue then – and again now – was how to cope with national debt, budget deficits, and rising interest rates.

“You are plunging Global South countries into a greater debt debacle that will cause more deprivation and misery,” wrote the Asian Peoples’ Movement on Debt and Development (APMDD) to leaders of the G7 rich countries on the eve of their mid-May summit in Hiroshima, Japan. Countries as diverse as Argentina, Pakistan, Sri Lanka and Zambia have confronted large debt and harsh repayment conditions in recent months. (Zambia has reached an agreement with lenders to restructure $6.3 billion of debt.)

This month, new reports from two United Nations agencies provide warnings and suggest some solutions to the weight imposed by banks and Global North governments on the people of the Global South.

The UN Development Program (UNDP) said 165 million people were forced into poverty between 2020 to 2023 as debt servicing pushed aside expenditures for  social protection, health and education. All of these additionally impoverished people poor live in low- and lower-middle-income economies, with the most-impoverished 20 per cent in low-income countries suffering the most with incomes in 2023 still below the pre-pandemic levels. Their governments cannot do more to assist because of conditions attached to debt repayment plans.

The UN Conference on Trade and Development (UNCTAD) said that public debt has increased faster in developing countries compared to developed countries over the past decade. “When developing countries borrow money, they have to pay much higher interest rates compared to developed countries, even without considering the costs of exchange rate fluctuations. Countries in Africa borrow on average at rates that are four times higher than those of the United States and even eight times higher than those of Germany.”

UNCTAD reports that 3.3 billion people live in countries were interest payments on debts are greater than spending for education and health care. An editorial in Mexico City’s La Jornada daily newspaper recalled thatUN Secretary General Antonio Guterres has denounced this injustice as “systemic failure.”

In a second editorial a day later, La Jornada noted the impact of Global South debt on efforts to confront the climate emergency. “In 2015, the 10 per cent of the world’s wealthiest people were responsible for half of the greenhouse gas emissions, and only one per cent were responsible for 15 per cent of those emissions. The most impoverished half of the people of the Earth generated only seven per cent of the emissions, but it is they who are most affected by climate change, higher food prices and even the destruction of their homes in severe weather events. The countries whose transnational corporations devastate the environment of the Global South with their unceasing extraction of natural resources close their doors to migrants and condemn them to remain in regions that have become uninhabitable because of the actions of those corporations.”

Historically, the ways that the IMF, banks and Global North governments have contended with debt crises have been to use them as opportunities to push neoliberal development models: free trade, extractivism, privatisation of state-owned companies and services, low-wage factory jobs and export-focused agriculture. And they avoid conversations about debt cancellation and reparations for colonialism and slavery.

APMDD and other Global South movements propose different approaches. In the letter cited above, APMDD urged G7 governments to: 

1. Cancel the debt for countries in need, including public debts of a questionable and fraudulent nature that violated human rights and contributed to exacerbating the climate crisis.
2. Support the elimination of IMF surcharges, which penalizes the most debt-distressed countries and further erodes the capacity of developing countries to respond to urgent social needs. 
3. Enact/strengthen national legislation to require the participation of private creditors in debt relief, which is a key element in any serious wide scale debt reduction or restructuring effort. 
4. Immediately deliver new, additional and non-debt creating climate finance for adaptation, mitigation and loss and damage, much more than the unfulfilled $100 billion/year pledge, to adequately meet the needs of the Global South. 

Once in a while, cracks appear in the wall of Global North indifference. In June, French President Emmanuel Macron convened a summit to reach a new “global pact” to finance the fight against poverty and human-induced climate change. I’ll share some outcomes in coming days.

Womin is a network of women’s organisations across Africa that proposes cancellation of African debt and ecofeminist alternatives to extractives models of development.